$1 Million Bitcoin In 2018?

Greetings patrons and general public. Well, after 9.5 hours on the road yesterday in a motorhome, from Santa Barbara, CA—a 1-night stopover and hosting of Dr. Michael Eades at camp for a charcoal BBQ dinner—to Arnold, CA in the Sierras, I’m finally back at my normal desk after 10 days.

The next, up later today, will be on setting up both desktop and wallet portfolios, so that in a few months time you wake up to this, which represents my Patreon portfolio that I started Sep 3, 2017 with weekly buys in Bitcoin and some 39 Altcoins, including about 5 ICOs. These are all to hodl, incidentally.

Going from fiat to Bitcoin with zero fees using ACH transfer and GDAX.

Buying altcoins directly with your Jaxx wallet using Shape Shift.

Buying ERC-20 tokens using the EtherDelta exchange.

But is it true, as some say, that this is just the beginning? Take a look at the link I just forwarded, provided via a Patron over on the Discord channel we have set up (see here about getting your Discord rewards).

For price levels already achieved through $11,500, the model backtests remarkably well, back to 2015. While past performance does not predict the future, it is sweet to contemplate prices of $100K, even $1 million, and much sooner than the wildest predictions have foretold.

It’s really funny when guys like John Mcafee have to come out saying he got it wrong by over 100%, but in the opposite way people often get it wrong. That is, people thought he was crazy calling for $5,000 Bitcoin in 2017 and here I sit with Bitcoin at $12,800. Astounding.

Wrap your mind around this chart, then read the background at the link.

You might want to do some calculations on how much Bitcoin network will use electricity if the price goes to million.

Because mining is unregulated and global business, profit margins are low. There are lots of competition. Most of the income is used to pay for electricity and new mining equipment.

Block reward is 12.5 btc until 2020 when it’s halved next time. There are 144 blocks per day. If price of bitcoin will go to million, value of block rewards + user fees is enormous in dollars. Every day miners are using huge amount of electricity to run their operations because that’s what they are paid for.

This creates some risks for any blockchain based on proof of work consensus system. Ordinary people will be pissed off if their electricity bill goes up because price goes up because miners are using so much. That will cause governments to step up and do something about it, like shutting down mining operations or creating “environment tax” for bitcoin users. Environmental organizations will also attack bitcoin miners and users.

This is why I don’t see any long term future with POW blockchains unless they have a built-in mechanism for changing the block reward if the electricity consumption goes too high.

Reply link does not work in your browser because JavaScript is disabled.Reply

At any rate, Bitcoin does not require more miners. It would do just fine on 10% or less of the hashing power it has now (as it was doing a years past). So, what’s the complaint, actually, that’s it’s lucrative enough still that it has way more hashing power then needed to actually confirm the transactions presented to it?

As the level of difficulty goes up and the reward goes down, miners themselves get to determine whether it’s worth it, and they have the option to do what they wish. Any miner can unplug anytime they want.

“So, what’s the complaint, actually, that’s it’s lucrative enough still that it has way more hashing power then needed to actually confirm the transactions presented to it?”

It seems that you have misunderstood something.

Hashing power is not used to process transactions. It’s used in a consensus process to decide who has the right to issue the next block. The more hashing power you have, the better are your chances of getting the right to create the next block and get the block reward. Basically it’s just a lottery. Hashing power is the lottery ticket.

So, the actual complaint is that the lottery prize is too big. People are using too much resources in order to win it.

Let’s assume that 60% is spend on electricity, which makes $1,080,000,000

Let’s assume that miners pay 5 c/kWh, which makes the total electricity used 21,600,000,000 kWh, and that’s only in one day!

Electricity consumption of the whole year would be 21.6 TWH * 365 = 7884 TWh. Not sure what’s the newest data on electricity generation but according to Wikipedia it was 23,816 TWH in 2014. If we use that number, the Bitcoin network would consume third of the electricity of the whole world in a year!

That’s not going to happen. So if somebody claims that bitcoin can go to million by 2020, I call that bullshit.

Reply link does not work in your browser because JavaScript is disabled.Reply

Primary Sidebar

ABOUT

I'm Richard Nikoley. Free the Animal began in 2003 and as of 2018, contains over 4,600 posts and 110,000 comments from readers. I cover a lot of ground, blogging what I wish...from health, diet, and lifestyle to philosophy, politics, social issues, and cryptocurrency. I celebrate the audacity and hubris to live by your own exclusive authority and take your own chances in life. [Read more...]

Please consider supporting this Blog by CLICKING HERE whenever you shop Amazon. Costs you nothing but sure does help out.